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You might consider posting your charts showing actual entries and exits, as marked by your platform. It will help focus you to "do the right thing" because before each execution you will know that it will be posted to the forum later that day.
A couple of day ago I decided to make up charts that would describe your problem situation and would demonstrate Fat Tails’ guideline to improving your trading. Since you stated you trade ES, I’ve used the ES chart. I’ve kept it simple only using basic resistance and support lines and simple trend lines. So let me give you a brief summary of the charts.
I want you to be AWARE Chart A is a 10 minute chart, Chart B is a 60 minute chart, Chart C is the daily chart. Keep in mind the charts are arbitrarily chosen to fit both your problem situation and Fat Tails’ solution. If you notice in between Chart A and Chart B I have labeled “Entry point of Long Position.” I took the liberty of reenacting your entry of your problem situation from Part I. So let me briefly recap your problem situation using charts as a visual tool.
You’re reading Chart A and you see your setup so you entered LONG. You glance at Chart B and you see resistance, R1. Now all your bad habits kick into play, but I will not belabor this point (you can read the blow by blow action in Part I and follow along using the chart candle by candle).
Onto Fat Tails’ template guide to your solution: ( I want you to be AWARE of this)
(A) the intial stop (which may not be larger than my money management stop)
In Chart A, place protective stop at first low arrow, the higher low. (again, this is arbitrary to YOUR money management)
(B) fixed targets below resistance or above support (various methods used to establish support and resistance)
Now that protective stop is in place, set initial target at first resistance (see chart b, “expected target for trade)
(C) exit after a buying or selling climax
In this particular scenario, your trailing stop would have taken you out (see step e)
(D) exit after a short setup shows
not applicable in this case, unless you flip the charts.
(E) trailing stop adjusted to breakeven, when part of the position was exited.
See Chart A, you will incrementally adjust your protective stop for a greater profit. This will take practice, but with practice you will get better and better at this.
(F) trailing stop further adjusted from time to time with discretion to protect part of the profits
See Chart A, you will incrementally adjust your protective stop for greater profit. This will take practice, but with practice you will get better and better at this and your account will love you for this!
Do you think you can be AWARE of these steps?
You see, Fat Tails is saying once YOU are in a trade, your cognitive bias is that YOU BELIEVED that the market was going to the MOON, R1, Chart B. (If you clicked on Fat Tails’ link you would see that Californians are not happier because of the sun and fun).
By following Fat Tails template for SUCCESS, you ended up with $$$$. While your cognitive bias was set to R1, Fat Tails’ step f made you money. In chart A, you can see you would have been stopped out right before the price action broke the trend line, an indication of what may come next….and sure enough, the price action failed to test the T1 in Chart B miserably.
I will tell you it’s difficult to be AWARE of price action failing to test T1, hindsight is 20/20 though…
Fat Tails also talks about this market having a Bipolar Disorder, but that’s good, it’s called volatility. But I want you to be AWARE of this Bipolar Disorder and be AWARE of the scale.
In Chart A, you see an UP Trend, then in Chart B, you see a DOWN Trend, then in the Chart C you see and UP Trend, only that you are currently in a counter trend within a UP Trend…this enough to give you whip lash….are you AWARE of that? And as you can see the price action took a nice bounce off of that trend line in Chart C…I believe it’s at 1341.50 as of today’s close.
So what is a TREND??? It depends, on the time of chart and the context in which it is being discussed. Be AWARE of that next time you hear traders loosely use the phrase “up or down trend.”
So you can see by following Fat Tails’ template you’re on your way in becoming a successful trader, but remember I said, “The reason I posted was because you have bad habits and you wouldn’t make it to Step C successfully.”
Were you AWARE of that?
You see, I’m not going to tell you how to trade, that’s your job, but I will tell you have bad habits that will impede your success as a trader. Example, let say you’re a great baseball hitter and I just happened to be the batting coach. And my job was to get your batting average from 350 to 400. And then I recognized that every time you swing your bat at the ball you closed your eyes. Are you AWARE of that? So I tell you have a bad habit, and by changing that behavior would probably improve your batting average.
Which brings to my “possible” solution to your bad habits….you remember them: “Tunnelvission-TICK-aholic, “ and “Deer-in-the-HEAD-litis,” and “HOPE,” and of course, “Bad Adrenalin.” Fat Tails referred to them in his guideline as “ANCHORING.” You need to re-anchor your AWARENESS away from them and begin to notice the other charts and/or indicators. You were probably wondering why there’s sooooo many AWARE words in bold and in large font. You know now.
Here’s what you do:
Before you place your trade take deep breaths and feel them, this makes you aware of your body…is it tense, is it relaxed, etc….best is being relaxed….make sure you follow Fat Tails guideline when doing this.
Say, “AWARE.” Then place the trade.
Why? Because, “I am AWARE.”
Aware of what? “I am AWARE of my other charts and indicators.”
That’s it? “I am AWARE of my other charts and indicators and not only price action. And I will constantly scan my other charts and indicators for signals that will protect my profits.”
Now, you’re reprogramming your subconscious mind with only a single word….”AWARE.” Keep in mind this is only a device, you can use any word you want…I just used this particular word because I felt it was appropriate. I would recommend you say this word at every new tick/candle of the chart you are watching.
Over time you will be pleasantly surprise that you will be aware when Hope speaks to you…when you’re in a “Tunnelvission-TICK-aholic, “ or “Deer-in-the-HEAD-litis” state of conscious…and that’s when YOU empower yourself to SNAP OUT of that hypnotic state.…you have a new anchoring for success.
Godspeed and much success in your trading journey.
Oh, my journal is specifically for me and only for me. So if you don’t know how to read your charts efficiently, especially when the Big Boy Charts are involved, I would be very, very, very careful in taking HEAT…you’ll need to pay careful attention to “money management.”
"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
I will try to implement the solution and report my progress in the journal.
I have incorporate couple of things immediately:
1. Always keep big boy chart in four front. Interpret price action always being aware of Big Boy charts action.
This is not a second nature yet. But is necessary and I will work on it.
2. Be aware of the possibilities ( continuation and reversal) at all times. I tried to do that today. Had good success...actually did a exit and reverse trade too. But too early to confirm progress....but on right track.
Regarding stops: Here is the process I have been through..
When I started to trade, I was slipping my stops but since then I do not have the issue of not taking my stops. However I was not sure if I needed to be aggressive to protect my stop or just give the trade some room to work out. I read the document by "Phantom of the Pits" who advocated an aggressive approach. This may not be right one for me. Also I used to play chess in my early years, you plan a move and then make the move, not second guess yourself all the time. It causes me a lot of stress.
I am still fine tuning my approach but your approach is what I used to do previously and I was comfortable doing. I generally use 1 point stop...I feel based on my trades I may need to use 1.25 points ( stop needs to be 1 tick below previous swing low). If the risk is more, just avoid the trade. I may take my exit early if the reason why the trade was initiated is no longer valid. Need to play around a little more on this.
Another idea that I have incorporated, which may also be helping is to exhale slowly and deliberately when trading. Helps me maintain focus and maybe reduce adrenaline by cutting off the fuel i.e. oxygen. Not sure about the second part but definitely helps in keeping focus.
Your suggestion for trailing the trade with stops below key levels is well taken. At my current level of trading maturity I seem to be very anxious to take profits. I will work on it....but may take some time to implement. Currently I am finding it psychologically difficult to do.
Sam
You can practise your skills all day long, but it's comparatively easy to get better at playing. The hard thing is to get better at winning--anonymous
I find defined price targets based on back testing then forward tested work best.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."